The Leavitt Group's Officers Council at the home office in Cedar City, Utah. The Officers Council forwards the mission of Leavitt Group Enterprises--to create, build and perpetuate independent insurance agencies. Seated: (left to right): Vance K. Smith, VP; JoNell M. Hone, VP; Lisa H. King, VP; Sandra L. Maxwell, Chief Training Officer; Kelly R. Russell, CFO. Standing (left to right): Pete S. Thorley, VP; Ronald P. Randquist, Director of Systems; Mark G. Kenney, Secretary and Managing Comptroller; Dennis E. Freire, VP; Eric O. Leavitt, COO; Dane O. Leavitt, CEO; Dixie L. Leavitt, Founder; Rodney B. Leavitt, Special Advisor.
Art Nehring and Mort Solot started their agency in Tucson, Arizona, at the end of World War II. The agents were young, eager to build their own business, disposed to community and industry service. Over the years, the Tucson pair served customers and peers well. Each presided over the Arizona Independent Agents Association for a term as president. Both have been inducted into the Arizona Insurance Hall of Fame.
Approaching their 70s, Art and Mort desired to perpetuate the Nehring, Solot & Walker Agency. But perpetuation meant more to them than transferring assets to new owners. Their tradition of customer service needed to continue unabated. The preservation of their good names and reputation was as important as the timely receipt of payments.
In 1990, Art and Mort discussed their perpetuation goals with the Leavitt Group's Michael Leavitt and Dane Leavitt. (Michael, a Chartered Property and Casualty Underwriter, was elected Utah's 14th governor in November 1992, and was re-elected in 1996 for another four-year term. He no longer is active in the Leavitt Group.)
Mort said, "Our research showed (the Leavitt Group) to have strong insurer relationships, and the financial capacity to perform buy-out commitments."
To help Art and Mort reach their objectives, the Leavitt Group created Koty-Leavitt Insurance Agency with Lloyd Koty, CPCU, ARM. "I was a producer at a national broker. I met Mark Butler of Butler-Leavitt Insurance at a company function. He persuaded me to talk to the Leavitt Group about starting my own agency," said Koty.
Although semi-retired, Art and Mort still work as agents, selling and servicing new accounts for Koty-Leavitt.
Through internal production and acquisitions, Koty-Leavitt's premium volume exceeded $25 million in less than seven years. "We have a strong sales culture. We emphasize education, so we are prepared and competent. We emphasize new business production," said Koty. But he claims his Leavitt Group affiliation induced his rapid growth and profitability. "It's been the Leavitt Group's stability, reputation and savvy that have made so many acquisitions possible," said Koty.
The Leavitt Group's published history states: "The Leavitt Group started with a 23-year-old agent seeking to support his family." That agent was Dixie Leavitt. Dixie was a fourth grade teacher in Cedar City, Utah. (The Leavitt Group's home office has remained in Cedar City, a southern Utah town on the western slope of the Colorado Plateau.) In 1952 Dixie sold life insurance to earn funds for graduate school. He was so successful--selling insurance was so rewarding personally and financially--that Dixie changed his life direction and started his own insurance agency.
Perpetuation meant more to Art Nehring (right) and Mort Solot than transferring assets to new owners.
Dixie developed large books of business in the Las Vegas, Nevada area, and in southern Utah. Said Dixie, "By 1958 I hadn't enough time to give both books of business adequate attention. So I created a new Las Vegas agency with my brother Bert." Dixie owned 60% of "Leavitt Insurance Agency;" Bert Leavitt owned 40%. Wade Leavitt, CIC, and Rodney Leavitt, CPCU, CIC, two of Bert's sons, now lead Leavitt Insurance Agency. Bert, a past president of the National Association of Professional Insurance Agents, died in 1982.
"Sharing ownership with Bert was a practical solution to an immediate problem. This experience gave me a vision of building agencies with men and women of integrity. We started many agencies by spinning off producers and their books of business," Dixie said.
Feeding the entrepreneurial spirit
Wegener-Leavitt Insurance Agency began as a producer spin-off. Juergen Wegener was an accountant at Leavitt Insurance Agency. He changed roles, becoming an excellent commercial producer. His volume soon warranted creating a new agency, thus satisfying Wegener's entrepreneurial spirit. Juergen and his wife, Karen, also a capable agent, have been skillful in handling large commercial accounts, winning tough renewals year after year.
Karen and Juergen Wegener
"It was important to us that 'Wegener' appeared first on the letterhead," said Juergen. "Our commercial accounts are resolutely relationship- and reputation-driven. We've had latitude to grow the agency as we've seen fit." Apparently, Leavitt Group relationships are conducive to such autonomy. Said Wegener, "We have the same goals as the Leavitt Group: increase profitability and strengthen the values of our respective equity positions."
Today the Leavitt Group consists of 68 agencies in seven states. Dane Leavitt, the Leavitt Group's CEO, said premium volume exceeds $218 million. According to Kelly Russell, CFO, between January 1993 and mid-1997, the Group increased from 33 agencies to 65, with written premium climbing from $75 million to $200 million. Kelly said, "As we grow, average profitability ratios are staying well above industry averages." Each Leavitt Group agency's ownership mirrors Dixie and Bert's pattern--Leavitt Group Enterprises, LP, owned by Dixie and his family, has a 60% interest and a local managing producer has a 40% interest.
Dane said, "Our work is to create, build and perpetuate independent insurance agencies. Each year the owners of over a thousand independent agencies sell or merge their agencies. We can present the right perpetuation solution for some of these sellers. At any given time there are hundreds of able producers who desire to build their own agencies, but lack the capital, markets or management experience to make the move. We can assist some in realizing that goal." Dane pointed out that, in an era of declining independent agency numbers, the Leavitt Group has created dozens of new agencies.
In 1978, the affiliated agencies formed Leavitt Group Agency Association (LGAA) to allow strengths of multi-agency synergy to combine with the effectiveness of individual agency autonomy. "LGAA's agenda was to develop a unifying identity, create common insurer relationships and underwriting facilities, and provide member agencies with group benefits and other services," Dane said. Dane added that "LGAA's board of directors, which includes managing principals selected by their peers in each of several regions, adopted resolutions "creating Placement, Benefits and Service Divisions to give competitive and strategic advantages to member agencies."
Kelly Russell said that "LGAA is owned by Leavitt Group Enterprises but operates as a cooperative for the benefit of all Leavitt Group agencies. LGAA's profits are divided among member agencies."
Achieving a competitive edge
James Farmer of Farmer-Butler-Leavitt Agency, Phoenix, Arizona, said he had adequate markets when he bought his father's agency in the 1980s. However, Jim sought greater capacity to enhance his agency's value in preparation for his eventual perpetuation. He reasoned his primary needs were stronger markets and management assistance--so he could spend more time personally producing commercial accounts.
"One concern was long-term market stability, and our relative inability to consistently close on acquisitions because our markets didn't dovetail with books available for purchase. With the Leavitt Group we've increased new business production, and effected book purchases and agency mergers. And now I have a perpetuation plan," said Farmer.
Farmer said that while his individual appointments are vital, LGGA's placement facilities give his agency a competitive edge. LGAA's Markets and Program (MAP) Division has established Group-wide relationships with over a dozen regional and national carriers. Member agencies, without regard to individual volume, reach these markets through the MAP Division. Gordon Denison, CIC, an LGAA vice president and manager of the MAP Division, fosters these Group-wide appointments.
"Agents submit risks to us and we help with the front-line underwriting before marketing them," said Denison. "The submitting agent receives the full commission, less two and one-half points to fund our operation. If we receive profit sharing monies on our volume, MAP retains a portion based on formula, and the balance is distributed to the agencies that placed business through us."
Leavitt Group agents can also place business through LGAA's Underwriting Management Division (UMD). The UMD's manager, LGAA Vice President Terri Ramsay, said, "We provide Leavitt Group agencies with the products of several insurers. Because we have varying degrees of underwriting, rating and policy issuance authority, we can work quickly." Terri said the UMD is funded by overrides paid by participating insurers; thus, agents retain full commissions.
The Leavitt Group has achieved more than enhanced market access: the Group has also attained economies of scale in automation. In the 1970s, Dixie anticipated the advantages of technology. For several years Dixie subscribed to batch accounting services. To reduce expenses, Dixie purchased an Arcom 1 computer system to provide batch accounting to his agencies. Sandra Maxwell, director of training, spearheaded the new in-house service. Through Dixie's prescience, in the early 1980s Leavitt Group agencies became among the nation's first to use automated agency management systems.
Today the Leavitt Group has a frame-relay, wide-area computer network. Leavitt Group agencies use AMS for Windows, which fully supports year-2000 dates. Leavitt Group Enterprises provides affiliates automation set up, on-going training and technical support through Leavitt Group Systems Administration (LGSA). LGSA is not a profit center of Leavitt Group Enterprises. Rather, LGSA operates like a utility, with costs allocated among Leavitt Group agencies.
Platt-Leavitt Insurance Agency, Salt Lake City, Utah (the Rough Notes December 1996 Marketing Agency of the Month) excels in leveraging automation to increase productivity and profitability. David Platt and one CSR handle two times industry averages for an agency of his size and business mix. Said David, "The Leavitt Group delivers state-of-the-art technology at a fraction of the price of purchasing a stand-alone agency automation system."
Powers-Leavitt Insurance, Buckeye, Arizona, has achieved similar results. "The Leavitt Group's economies of scale make automation very cost effective. Our transactional filing practices help us to exceed our E&O carrier's loss prevention expectations," said Charlene Powers-Broadbent.
Charlene Powers-Broadbent
Leveraging growth opportunities
At 19 Charlene began working for an agency in Buckeye, her hometown. She became licensed, and soon she ran the agency. A friend suggested that she talk to the Leavitt Group. Today Powers-Leavitt has volume of over $10 million. Charlene writes large farm risks; she is the top producer of cotton gin accounts in Arizona.
"It's a satisfying and profitable relationship. The Leavitt Group's financial strength helps my agency seize growth opportunities through hiring producers and buying books of business," Charlene said.
Leavitt Group agencies have, without the burden of modem dial-up, perpetual access to the Internet. Member agencies communicate with each other, underwriters, marketing representatives and clients via Internet e-mail. Leavitt Group Enterprises' Intranet site is a clearinghouse of Leavitt Group- and industry-related information and news.
Many believe direct insurance sales on the Internet threaten independent agents. To help agents keep apace of Internet-based competition, Leavitt Group Enterprises has formed with agent Bruce Crankshaw a property and casualty Web site called InsureWorld (www.insureworld.com). Said Bruce, "InsureWorld's purpose is to walk consumers through an instant, on-line comparative premium quote process. Then the consumer chooses a local independent agent who can close the sale." Bruce reported InsureWorld is presently premiering in several western states.
The Leavitt Group also operates an Internet site at www.leavitt.com. "Our Web site describes our history, structure and mission. Agents and agency owners e-mail us directly to learn more," Dane said.
Internet technology facilitates communication with the Leavitt Group. But traditional methods work as well. Alma Capron was a producer at an agency whose owner opted to sell. Alma wanted to buy the agency but lacked the experience and resources to structure a buy-out and secure payments. Referred by an insurer, Alma telephoned the Leavitt Group to begin affiliation discussions.
"I was impressed with Leavitt Group Enterprises' people. Together we formed Leavitt Group Southwest in Hatch, New Mexico, and purchased the agency I had worked for," said Alma.
Eric Leavitt, chief operating officer, affirms the Leavitt Group's people-centered approach to the agency business. "We will continue our pattern of carefully expanding into new states by working with qualified individuals to create or acquire quality independent agencies," said Eric. To that end, Eric said the Leavitt Group is "actively seeking good people and good agencies in our existing states--Arizona, Colorado, Idaho, Nevada, New Mexico, Oregon, and Utah. We also are looking for affiliation opportunities in other states, such as California, Connecticut, Montana, Washington and Wyoming." *
For a copy of the Leavitt Group's history, call Gwen Hudson at (435) 586-6553.
"
You're gonna' love it!"
Doris Clark's case is one example of a Leavitt Group agent completing the ownership cycle.
Doris retired in January 1996 after 30 years of service in the Leavitt Group. She ended her career as co-owner of the Group's largest bonding agency.
Upon her retirement, Doris sold her 40% interest in Clark-Leavitt to new co-owners selected by Doris and Leavitt Group Enterprises. The sale provided Doris with retirement income and effected an orderly transition.
Said Doris: "I was hired on May 26, 1965 as a secretary to Bert Leavitt and also to handle claims. Because I knew shorthand, I became the stenographer for producers. Eighteen months later I was offered the job of handling bonds. I said 'No,' but Dixie Leavitt had a way of putting his arm around you and saying, 'You're gonna love it!' And I did.
"In 1978 I was asked to join Terry Leavitt in starting the Clark-Leavitt Agency. Terry knew only insurance; I knew nothing but bonds. I immediately said 'No,' but again, Dixie put his arm around my shoulders and told me I could do it. He said, 'You're gonna love owning your own agency.' He was right.
"In 1980, Terry left to head the Underwriting Management Division. I kept the Clark-Leavitt Agency going. I had two young CSRs: one knew aircraft; we didn't have any aircraft policies. The other knew homeowners, but we were a commercial and bonding agency. It was a zoo! I worked many long days.
"By the time I retired, we had 10 employees, great relationships and a thriving insurance agency. And the beautiful thing is I'm being paid for the value I created in the Clark-Leavitt Insurance Agency."
©COPYRIGHT: The Rough Notes Magazine, 1998